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  • NAB | Doddsville
    2010 2 52 pm Last week I shared a small personal example of a much wider issue being that in toto Australians pay way too much for banking services It was already bad five years ago but has gotten increasingly worse as competition dried up during the global financial crisis It s understandable that the crisis has increased the cost of borrowing for customers and even widened lending margins for the foreseeable future By Gareth Brown II Posted in Gareth Brown Also tagged Bank super profits tax big four banks CBA Commonwealth Bank ME Bank Comments 11 Intelligent Investor Analysts Nathan Bell research director works alongside Gareth Brown James Greenhalgh Gaurav Sodhi and Jason Prowd This blog is where they share their thoughts and gather feedback about their ASX research at Intelligent Investor Search Connect with us Recent Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/nab/ (2013-02-03)
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  • Probabilistic Thinking | Doddsville
    us Recent Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/probabilistic-thinking/ (2013-02-03)
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  • How bankers’ have a gun at your head | Doddsville
    buying the PEPS after the record date of 9 November has no right to participate in the reinvestment and will be stuck with a long term and probably illiquid holding We d speculate that the early record date was implemented to help the marketing offer for CPS which selling brokers can still legitimately claim are worth full face value for now because one can t look through to the future CPS price based on today s PEPS price It also shows all longer term PEPS holders the consequences of not converting consequences that are partly the result of the gun at their heads Mr Market has already spoken PEPS which closed at 94 on the day prior to the offer announcement now trades at barely 90 and traded as low as 85 so much for a money good investment It seem the PEPS price is responding to concerns that the security will become illiquid and perhaps even delist If the market is behaving rationally the CPS will struggle to attract much in the way of fresh money from willing investors although based on the post bookbuild announcement there s always a few hundred million of dumb money floating about In contrast PEPS owners have little alternative but to switch to the CPS Management is likely to be very successful in wangling the great bulk of them to do so For those of us that genuinely believe in sanctity of markets there s something troubling about the whole process PEPS holders are being corralled and manhandled into an offer they neither want nor have asked for Without compensation they have become the real underwriters of this new Basel III compliant issue This isn t quite as egregious as when Seven Group encouraged holders of Seven TELYS3 into TELYS4s a few years back through a deal which made the dividend stopper working on behalf of TELYS3 holders effectively impotent But it s a long way from ideal Then as now investors responded with barely a whimper It would be to the long term benefit of the capital markets in Australia if regulators and exchanges worked together to ensure that new securities arise only from the competitive crucible of willing buyers and sellers Instead in collaboration with the authorities we get a threatening reinvestment offer like this Mark me down as concerned VN F 1 9 20 1166 please wait Rating 4 8 5 12 votes cast How bankers have a gun at your head 4 8 out of 5 based on 12 ratings This entry was written by Gareth Brown II posted on at 3 34 pm filed under Banking Gareth Brown Opinion and tagged Bank of Queensland BOQ CPS offer PEPS Bookmark the permalink Follow any comments here with the RSS feed for this post Post a comment or leave a trackback Trackback URL Doddsville podcast 22 November 2012 Previous Entry Minding our own business on executive pay Next Entry 1 Responses Add Yours Discussion craig said Posted November 25 2012

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/how-bankers-have-a-gun-at-your-head/ (2013-02-03)
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  • Bank Of Queensland | Doddsville
    Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh and Gaurav

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/bank-of-queensland/ (2013-02-03)
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  • BOQ | Doddsville
    Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh and Gaurav

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/boq/ (2013-02-03)
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  • CPS Offer | Doddsville
    Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh and Gaurav

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/cps-offer/ (2013-02-03)
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  • PEPS | Doddsville
    Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh and Gaurav

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/peps/ (2013-02-03)
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  • ANZ’s Asian expansion: Divine or doomed? | Doddsville
    The big bang tranformation of a huge purchase usually seems more related to inflating egos than to actual planning Reply John S said Posted December 6 2010 at 12 59 pm For me the biggest danger for ANZ is their next move The purchases made to date may well work out OK The buyer was distressed and timing was such that the number of alternative buyers less than in normal circumstances The chance that they have not overpaid for the purchases over the last couple of years are therefore higher than normal Those circumstances no longer exist and ANZ seems determined to make further acquisitions in Asia Danger ahead Reply eric sommer said Posted December 6 2010 at 2 56 pm Does Mike Smith take any notice of this Reply ANZer said Posted December 6 2010 at 3 08 pm Underlying all these strategies and key to ANZ s Asian expansion and other strategic initiatives are its people Unfortunately staff engagement has plummeted at ANZ in fact so badly they have not released the actual engagement figures internally Senior management at ANZ are treating staff terribly with threats performance management pay cuts bonus cuts sackings etc for minor indiscretions or for not falling into line with senior management opinion Senior management talk about openness and transparency but if staff provide a differing view to senior management it is either used against them or they are penalised in one form or another Staff are also shocked to learn that many of the senior managment at ANZ are hiring mates from other institutions on huge salaries hence their cost to income ration has blown out The Asian expansion and other strategies may be right but they won t get the execution right with the poor engagement level of staff Reply Lone Ranger Reply December 6th 2010 at 8 15 pm Ouch So true Reply Old Digger Reply December 17th 2010 at 11 48 pm Absolutely true about staff engagement being rock bottom They might have a flashy new building but they way they treat their staff is despicable Reply MANZ Reply December 15th 2011 at 1 28 am How true I was a victim too though I work in Asia They ve hired some really crappy managers and are firing good people on false pretexts Many of my colleagues were fired or life made hell so they quit Reply pcd said Posted December 6 2010 at 3 10 pm Greg TII has also made a number of bad calls over the same period How about you provide a list of those as well as the ones where TII was correct Gareth All the company talent was retrenched at the end of 2008 in the OneANZ program China Asia is set to keep growing so everyone tells me ANZ has some exposure to that growth do any of the others For me the question is does ANZ know HOW to compete in a more open market than what we have in Oz The management being brought in at the moment all seem to be coming from outside Oz and that can not be a bad thing Reply Greg Hoffman TII Reply December 6th 2010 at 3 24 pm We certainly have made a few bad calls pcd in fact they re the topic of a special report we ve just sent to the printer and a podcast series we re about to produce But the point of this piece was to point out that it is quite possible to identify flawed or risky strategies without detailed knowledge of the executives involved not to trumpet all of our good calls I m sorry if it came across that way note there were no buys on the list nor many of our other successful sells based on other factors such as overpricing for example It was a list of cases where we identified the strategic challenges and problems for our members to show that we need not know each of the key executives to identify high risk situations ahead of time Reply Geoff said Posted December 6 2010 at 3 49 pm Yes you are good a spotting risks and flaws in strategy but they are often over stated or are not reflected in the share price Take your recommendations on BHP Rio vs BHP the tortoise and the hare Stocks in Detail Issue 167 19 Jan 2005 Take Part Profits 15 68 With a further 9 Take Part Profits recommendations Only changing your view with BHP Billiton splashed in oil spill Stocks in Detail Issue 297 04 Jun 2010 Hold 37 76 BHP is currently at around 44 that is a lot of part profits to be taking I am not saying that the IE recommendations are wrong the view is not always a view shared by the market When IE downgrade a stock to take part profits sell or avoid I change my automatic trailing stop to a much smaller margin Which has allowed me to stay in ANZ and BHP but get stopped out on ABC and Babcock Brown I have not held the others Reply Paul said Posted December 6 2010 at 4 23 pm One key element missing from the analysis of ANZ s strategy is that with each acquisition in Asia this is actually contributing to a de risking of one of the key risks in the Australian Banking sector reliance on foreign wholesale funding At present Australians are massive net borrowers and rely on foreign debt generally taking the form of bonds issued by banks to support the massive amount of consumer debt Unlike Australia as a general rule the franchises ANZ has been acquiring in Asia have substantially higher deposit to loan book ratios my understanding is generally they have had a ratio close to 1 1 which compares very well to a normal reserve requirement of 10 which means that the acquisition itself is a good source of cheap funding to support the Australian loan book of ANZ So when being critical of ANZ s Asian growth strategy you can t just look at price paid versus earnings acquired as the access to stable cheap funding is just as much the key value piece in the acquisition and is an enabler of further loan book growth domestically Reply OzzieORAsianBankers said Posted December 6 2010 at 5 40 pm Having lived in Singapore and hanging out with a lot of expats it seems that ANZ has an inability to hire local All the senior and middle managers seem to be imported from Melbourne A lot is being spent on expats who don t have local knowledge Is it a comfort thing If you are going to be an Asian bank you need to hire locals in roles other than manual transaction processing e g processing ANZ s branch transactions from the RBS branch acquisition It s like they haven t heard of computers Reply Lone Ranger Reply December 6th 2010 at 8 09 pm They haven t The people from Melbourne provide comfort to senior management ANZ is not an Asian bank Just a group of anglo expats Look at the people Michael Smith brought at executive levels Reply Si Reply December 7th 2010 at 2 25 pm It is very normal for banks to only hire expats I work for a major and you can count the number of local managers on one hand in the different offices in Asia Reply Neil said Posted December 6 2010 at 5 55 pm I think it is worth mentioning that a bank with experience in a mature western economy can enter a much less developed economy such as Vietnam with refined systems in place which have a competitive advantage over the local less experienced institutions I think I recall reading that credit card use home loans and even the direct electronic crediting of employee pay is only just starting in this particular developing country for example On another note ANZ announced back in March that they were looking at selling their interest in Sacombank but I haven t seen any announcement that this has happened Reply OzzieORAsianBankers Reply December 8th 2010 at 9 54 pm The thing with ANZ Singapore is that ANZ staff must have ANZ accounts because it isthe only way for them to get paid As soon as their pay goes in they sweep it out to DBS HSBC or Citibank because ANZ products systems and service are terrible at the moment Reply Ralph Selwyn Reply December 10th 2010 at 11 55 am I sold ALL my ANZ Bank shares when I read that the bank would expand into Asia and when a SMH business report said that ANZ paid too much for the ING Wealth management acquisitions I am glad I sold R3 Reply Apples said Posted December 6 2010 at 7 18 pm Asia is a competitive market places for talent and my opinion is that ANZ is paying a lot of money in some areas for spoilt fruit I think they re in for a bumpy ride but I don t have a view either way as to whether their overall strategy will be successful in the long term From an investing point of view I think they are expensive relative to their peers and I divested at the beginning of the financial year Reply Lone Ranger said Posted December 6 2010 at 8 05 pm They have a very fragmented technology infrastructure that will undermine any acquisition That should have been resolved before trying to add more business units Their project management skills are limited and management relies heavily on external consultants for advice This could indicate a lack of understanding from internal management and a lack of confidence in their ability to deliver resounding improvements The growth strategy is ambitious at best and will line Mr Smith s pockets even if it fails Reply geoff said Posted December 6 2010 at 8 30 pm No mention of the stocks that you ve given a bum steer to your members Reply Gareth Brown TII Reply December 6th 2010 at 8 54 pm Sticking to the topic here Geoff I cannot think of one stock that The Intelligent Investor has avoided due to a large acquisition led strategy that after the passing of a sufficient period of time 3 5 years we ve come to regret All the ones I can think of have subsequently bombed But if you can find an example of one we ve avoided that we should be regretting let us know and we ll publish it Reply peter said Posted December 6 2010 at 9 59 pm if my experience is a guide ANZ s asian expansion is doomed to failure i live and work near an anz branch in an asian city and entered the branch wanting to invest a not inconsiderable sum comfortable that i had knowledge of and confidence in the brand Long story short i was unable to invest as none of their documentation was available in english and as hard as i tried to work around this the staff worked much harder to dissuade me Clearly their focus isn t english speaking ex pats but why wouldn t you make yourself available for every bit of business you can get especially when it walks through your door Anyway HSBC were able to help me and with a level of service that had to be experienced to be believed with a consequence that ANZ in Australia or Asia have lost me forever Reply Ashleigh Reply December 17th 2010 at 12 06 pm Interesting I ve been an HSBC customer on and off in Australia for 10 years their customer service has always been excellent Just a shame their OZ branch network is not all that good though really thats not needed when so much is electronic anyhow Reply Ben Jones said Posted December 6 2010 at 10 05 pm Are you saying then that all Australian companies should just concentrate at growing at home ANZ should be applauded for bringing Aust know how and capital to invest overseas Everyone talks about Asia leading the world in the next few decades but how many Australian companies will be a part of that growth Reply Mark said Posted December 6 2010 at 11 00 pm I agree whole heartedly with your comments Greg This is a highly risky strategy and ANZ s track record of managing it s risk and compliance obligations is extremely poor In recent years Opes Prime is a good example as are the reported issues this year in their Collections area In regards to the last point I wouldn t have expected issues such as this after the much publicised Securities Lending review and it s associated remediation plan Or is it just that publicity misleading the market A review of postings here and in the associated article in The Age indicates that this company has some serious management issues The arrogance and continued blogging by disgruntled staff would indicate to me that they have not improved their risk management practices or the ethics of senior staff I have sold down my holdings in ANZ this year as I believe the company s management are not acting responsibly are taking too high risks treat their staff poorly inherently risky not acting as responsible citizens are self interested and have not learnt from past lessons Arrogance breeds ignorance Our banks are extremely arrogant due to their oligopoly Oligopolies Monopolies etc in all industries inherently have risk management issues due to their sheltered position All it takes is true competition to start exposing these issues in their strategies and management capability I would recommend that shareholders use their voting power to cut off the money supply to the board and it s senior management If their strategies are sound they can wait for these bonuses when the results have truly proved themselves I also question based on blogs and media reports that the company s remuneration frameworks meet a number of obligations Such as ASX Corporate Governance Principles APRA standards 510 and 520 Occupational Health and Safety legislation and their own internal Code of Conduct and ethics Commentary on this site indicating we are overlooking the benefits of the deposit base in Asia may have some basis though who is this message coming from Management and the Board whom all have a vested interest in ensuring their positions are not challenged Send a clear message that you are concerned with certain behaviours the risk of the expansion strategy and the consistent and fair implementation of their remuneration frameworks Vote against the remuneration report the re election of current directors and especially Mike Smith s performance rights at the AGM later this month In fact why not go one step further and advise your investment and superannuation funds to do the same Attend the AGM in Adelaide and ask the Directors how they manage the risks of expansion and the threat to their oligopoly positions What are they doing to address management risks project risks integration risks sovereign risks operational risks compliance risks market risks and so on Reply Shareholder said Posted December 7 2010 at 12 25 am I would encourage the analyst community to investigate carefully the 2010 results for Asia Pacific It surprised me greatly after the recent results that only one article http www bankingday com nl06 news selected php act 2 selkey 10740 accurately noted that the real reason behind the growth in ANZ s Asia business had been the equity partnerships that had been created largely before the incumbent management of Smith and Thursby The article makes the point that when you strip out their performance the rest of the Asia business is pretty woeful Coupled with disastrous engagement results and increasingly high staff churn there are rocky roads ahead for the Asia strategy Reply Jenny said Posted December 7 2010 at 6 38 am Senior management are extremely arrogant and do not want to hear bad news from staff The place is being run by risk there is no real appetite to do business in Australia The bank s risk dollar is spent to help out buddies such as Thugsby s business in Asia The results are not there Staff in Asia sit around doing absolutely nothing at all Then again how is this actually different from other institutional organisations Shareholder value is secondary to internal power Reply Anonymous said Posted December 7 2010 at 10 59 am The first thing that we need to understand is that this is a long term strategy Mike Smith has some short term targets but it is really the management board pushing a 20 year strategy forwards As most of you will agree the centre of global economic power is shifting towards Asia Companies that are leaders in the new world at the end of this shift will be significantly better off than old world leaders However the timeframe is not clear lets say anywhere between 5 and 20 years and the structural shift that Asian countries will have to go through will cause huge economic and socio cultural disruption dips So ANZ faces two key areas of risk 1 the typical international expansion and take over risks that all companies face which Greg Hoffman has articulated well and 2 these periods of economic dips will put big holes in ANZ s P L during certain periods My view is that the benefits of being well placed in the new world will actually mitigate the traditional risks Greg mentions The decades of prosperity from being a leading Asia pacific bank will easily pay off any bad take overs and teething problems So the only real risk to the strategy is these economic dips and whether ANZ returns from Asia with its tail between its legs This will be costly and pointless for shareholders But as I mentioned in the opening

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/anzs-asian-expansion-divine-or-doomed/ (2013-02-03)
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